Michael dell options backdating

For instance, public companies generally grant stock options in accordance with a formal stock option plan approved by shareholders at an annual meeting.Many companies' stock option plans provide that stock options must be granted at an exercise price no lower than fair market value on the date of the option grant.The problem with this practice, according to the SEC, was that stock option backdating, while difficult to prove, could be considered a criminal act 6.

Stock options are often granted to upper management.

While options backdating is not always illegal, [2] it has been called "cheating the corporation in order to give the CEO more money than was authorized.

To be legal, backdating must be clearly communicated to the company shareholders, properly reflected in earnings, and properly reflected in tax calculations.

It allegedly failed to inform investors, or account for the options expense s properly.

Since the advent of stock option backdating, corporate policies have moved first toward a posture of encouraging backdating as a standard business practice, but then toward a posture of avoidance as public scandals emerged and investigations into fraudulent or dishonest business practices increased despite a commonly held belief that backdating was an acceptable and legal practice.

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